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European Commission Report: renewables beat fossil fuels in 2020, but the result is based on exceptional circumstances
The European Commission report on the electricity market for the last quarter of 2020 shows satisfactory results, but what’s really behind them?
The European Commission recently published its analysis of the European electricity market for the fourth quarter of 2020. The analysis shows that electricity consumption was close to pre-pandemic levels despite the restrictions on economic and social activities.
Electricity consumption had diminished, instead, throughout the course of the year and for the first time, more share of electricity was produced from renewable sources in EU’s energy mix than from fossil fuels, 39% against 36% to be exact.
According to the report, which we have attached to this text, consumption of gas and electricity decreased by 3%, and 4%, respectively; the share of energy generated from coal and lignite fell by 22% and production from nuclear sources also decreased (-11%).
These are encouraging results, especially in the context of the achievement of climate targets and Europe’s energy transition. However, as emphasised in the report, 2020 was an exceptional year that brought exceptional results, so there’s no guarantee these will be replicated in the future. The structure of the energy mix changed because a series of exceptional factors the previous year caused a rise in renewable generation. The Covid-19 pandemic had an impact on consumption and, as a result, on energy demand, plus the winter was warm and weather conditions were good. Rising renewable generation was also closely related to new solar and wind installations made in 2020, which witnessed great expansion thanks to significant investments at a national and European level.
The EC report also analyses developments in annual average baseload wholesale prices, evidencing a drop in natural gas consumption in Europe from 406 billion cubic metres in 2019 to 394 billion cubic metres in 2020. National gas production in the Union also fell, reaching 54 billion cubic metres in 2020, 23% less than in the previous year, while imports went from 358 to 326 billion cubic metres, a decrease of 9%.
Lastly, the analysis devotes a brief section to the energy market in Italy, where average monthly electricity prices fell in October. According to the charts, the highest price was recorded in December, with rising demand and gas prices driving the price increase; the national price averaged between 30 and 50 €/MWh and rose above 50 €/MWh in December.
Electricity consumption had diminished, instead, throughout the course of the year and for the first time, more share of electricity was produced from renewable sources in EU’s energy mix than from fossil fuels, 39% against 36% to be exact.
According to the report, which we have attached to this text, consumption of gas and electricity decreased by 3%, and 4%, respectively; the share of energy generated from coal and lignite fell by 22% and production from nuclear sources also decreased (-11%).
These are encouraging results, especially in the context of the achievement of climate targets and Europe’s energy transition. However, as emphasised in the report, 2020 was an exceptional year that brought exceptional results, so there’s no guarantee these will be replicated in the future. The structure of the energy mix changed because a series of exceptional factors the previous year caused a rise in renewable generation. The Covid-19 pandemic had an impact on consumption and, as a result, on energy demand, plus the winter was warm and weather conditions were good. Rising renewable generation was also closely related to new solar and wind installations made in 2020, which witnessed great expansion thanks to significant investments at a national and European level.
The EC report also analyses developments in annual average baseload wholesale prices, evidencing a drop in natural gas consumption in Europe from 406 billion cubic metres in 2019 to 394 billion cubic metres in 2020. National gas production in the Union also fell, reaching 54 billion cubic metres in 2020, 23% less than in the previous year, while imports went from 358 to 326 billion cubic metres, a decrease of 9%.
Lastly, the analysis devotes a brief section to the energy market in Italy, where average monthly electricity prices fell in October. According to the charts, the highest price was recorded in December, with rising demand and gas prices driving the price increase; the national price averaged between 30 and 50 €/MWh and rose above 50 €/MWh in December.
